by Thorsten Polleit
The science of economics is different from natural science. In natural science, it is possible to detect regularities in the form of “When A, then B” or “If A rises by x percent, B changes by y percent.” As a result, in natural science it is in principle possible to come up with more or less reliable quantitative predictions. This is impossible in economics, for there are no quantitative regularities, or behavioral constants, in the field of human action comparable to those to be found in natural science. Different people—and even the same people—at different instants of their lives react differently to the same external stimulus.
At the same time, however, there are inexorable economic laws such as the law of supply and demand or the law of diminishing marginal utility. These laws govern human action and can be logically derived from the irrefutably true proposition that “humans act.” It is in this sense that we can know the outcome of various modes of action in qualitative but not in quantitative terms. Take, for instance, the case of the central bank increasing the quantity of money in the economy.